Reader Comments

Wed, Aug 8, 2012

Having worked on the previous contract for a number of years I can tell you that the government has had significant issue getting all task orders out for competition in a timely manner with award decision lingering for weeks or even months and that was with three prime contractors. Imagine how much additional work is required by the government when they must now evaluate up to 7 responses, make awards and then begin work. I'm not sure how much benefit will be realized after the significant overhead investment by both government and contractor is expended. This of course does not take into consideration the personal frustration that will be experienced by both government and contractor employees.

Tue, Aug 7, 2012

Really good first comment. It is amazing that government often ignores these costs. Take the calculations up a level. Another back of the envelope: The gov't IT business is $80B for contractors. I think a good B&P estimate for this segment of the industry is at least 2% of this amount or $1.6B. I can safely say, in my experience, the inefficiences caused by procurement delays, failure of the government to annouce procurement strategies in a timely manner, protests, efforts to protect against protest, raw time trying to get enough solid info to make a good bid decision, poorly worded RFP's etc etc cause a 50% ineffciency factor. THUS, taxpayers pay about $800M per year for this inefficiency just in the IT industry(and since everyone seems to calculate costs over 10 years these days) or $8B over the next decade. How about the inefficiencies in other segments of procurement? I'll bet the numbers in other areas are equally as large. Nick, you are usually on point but I am not so sure this time.

Tue, Aug 7, 2012

Wow! More companies, more competition, better prices and better solutions. What is that they say about better-faster-cheaper? Pick one, or maybe two; you'll never get all three. Let's see: 7 companies bidding on 600 (or 782 if you read the RFP carefully) task orders per year with 10-page technical proposals plus cost proposals for each one. How much manpower on both the government's side and the contractor's side does that add up to? This was a 2-year procurement exercise. Those companies will all be recovering those B&P costs on top of their contract administration costs through the execution of these seven contracts. Back-of-the envelope calculation using 10% G&A x $871M = $87M. Multiply that by 7? No, that wouldn't be fair, would it? How about we just throw in an inefficiency factor of 2: $180M. Wait! Let's throw in the recent OPM requirements: agencies must reduce contractor support services manpower costs to below 2010 levels. What we lose in inefficiencies we can make up at the expense of the people doing the work. Unless, of course, those people exit for more stable jobs elsewhere (even if they pay less). But don't worry, less experienced, less expensive people will fill in for the 900 or so positions involved. What was that about better-faster-cheaper?

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